Employment fluctuations in US regions and industries: The roles of national, region-specific, and industry-specific shocks

This study quantifies the roles of national, region-specific, and industry-specific shocks in aggregate employment fluctuations in U.S. regions and industries. Variation among the growth rates of major regions and industries is decomposed into unobserved national, region-, and industry-specific components. The results reject the view that any heterogeneity in regional fluctuations is attributable to differences in industry composition. After controlling for industry mix effects, roughly 40% of the variance of the cyclical innovation in any region's growth rate is particular to that region. In addition, region-specific shocks appear to propagate across regions over time.